What Ethical Responsibilities Does an Organization Have to a Different Stakeholder? (2024)

Whether you run a company that sells widgets, windmills, or wine tasting services, you have many responsibilities that extend beyond making money and paying bills. Ethical business conduct is a moral imperative for your organization, and it may be required by law. Your obligations are likely to vary, however, depending upon which stakeholders you consider.

Who Are Your Stakeholders?

Stakeholders can be any person or organization that has a vested interest in what your business does. Employees, customers, shareholders, board members, and even members of the community, can all be affected by what you and your organization does. Your responsibilities to each will vary.

Obligations to Employees

As an employer, you have a moral obligation to offer your employees fair pay and reasonable work expectations, while also providing a safe work environment. The U.S. Occupational Safety and Health Administration outlines specific rules about workplace safety, while the Americans with Disabilities Act explains the accommodations you must provide to those who have disabilities. Beyond the basics, though, you should have a way for your employees to address grievances in the workplace. Even if you don't have a formal HR Department, you'll want to have someone in charge of making sure that employees are treated fairly and with respect.

You may also want to have a communication channel that keeps employees informed. Whether your organization is growing or is facing likely layoffs, the ethically moral thing to do is to let your employees know so they don't feel blindsided. Set up quarterly meetings to keep everyone informed of what's happening and answer questions in a forthright manner. If things aren't going well, let your employees know how you might assist them, such as offering worker retraining or providing career services.

Obligations to Customers

Providing your customers with good quality at a fair price is both an ethically and financially responsible path. Whatever product or service you produce, you should give your customers what you promise. There are many recent examples of companies doing quite the opposite, whether it's for-profit schools using unscrupulous marketing tactics and promising larger-than-life results from the diplomas they offer or Wells Fargo and similar companies committing outright fraud by creating false accounts. Be honest, be fair. And your customers will reward you with purchases and brand loyalty.

Shareholders and Boards of Directors

If you've ever worked for a large, publicly traded company, you already understand the ethical requirements from governmental bodies such as the Securities and Exchange Commission. But even if your business has no shareholders, you may have a board of director or an advisory board. Maybe your "board" is only a single person who loaned you the money to start your dream business.

Your ethical responsibilities are clear. Be honest about how the business is doing. When will you be able to pay back the note and what can your investor expect in the way of a return on his investment?

Responsibilities to the Community

Your responsibilities to the community at large may be more nuanced, but that community remains a relevant and important stakeholder. Of course, you'll adhere to the regulations in your city or town, but being a good community member as a business may require more than not polluting waterways or spewing toxic gases into the air. You may want to give back by donating to worthy causes or by sponsoring events. The benefit of being a good corporate citizen isn't only ethically right; it can boost your brand, and can influence your bottom line in positive ways.

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